Harold and Sheila are both 66 years old; Harold is eligible for $1,600/month in benefits, and Sheila for $1,300/month, based on their respective earnings histories. Both Harold and Sheila are very healthy and wish to hedge against the risk that they both live well into their 90s, so both of them would like to wait on their benefits and earn delayed retirement credits. If Harold goes through the file-and-suspend process, then Sheila can file a restricted application for just spousal benefits (while delaying her own individual benefits). The end result: Sheila receives $800/month in spousal benefits now based on Harold's record, Sheila can switch to her $1,300/month individual benefit in the future (and earn 8%/year in delayed retirement credits while she waits), and because Harold filed-and-suspended he will continue to earn 8%/year delayed retirement credits on his benefit as well.
Another benefit of the file-and-suspend rules is that by filing, the primary worker not only activates eligibility for a spouse to claim spousal benefits, but also for dependent benefits to be paid on behalf of minor children as well (albeit subject to the maximum family benefit limitations). Thus, the file-and-suspend strategy can be effective for couples, and families with minor children as well (whether the parents are a couple or a single individual heading the household!).
Next blog post we will discuss the social security file and suspend strategy for individuals.